The U.S. Energy Information Administration (EIA) released its weekly data on diesel and gasoline retail prices for the week ended May 4, 2020. Retail prices for gasoline rose for the first time in 9 weeks. Diesel prices continued to sink, as the COVID-19 pandemic causes severe demand destruction. The EIA publishes weekly “product supplied” data as its proxy for demand, and the latest weekly report shows that gasoline demand fell from 9696 thousand barrels per day (kbpd) during the week ended March 13 to just 5065 kbpd during the week ended April 3, a huge hit of 4631 kbpd in just four weeks. However, the data for the week ended April 24 report that gasoline demand has crept back up to 5860 kbpd. Although the EIA is careful to point out that these numbers are not a precise measure of demand, can it be that the gasoline demand is now in recovery? Distillate fuel oil demand fell by 1256 kbpd between the week ended March 13 and the week ended April 10, falling from 4013 kbpd to 3807 kbpd in a four-week period. However, the EIA reported that diesel demand also crept back up by the week ended April 24, averaging 3164 kbpd that week. U.S. product supplied for all petroleum products appeared to have hit bottom at 13,797 kbpd for the week ended April 10, 2020. This was the lowest demand ever recorded since the EIA began publishing the series in November of 1990. Demand in January and February 2020 was over 20,000 kbpd.
For the week ended May 4, retail prices for gasoline rose by 1.6 cents/gallon. Retail prices for diesel fell by 3.8 cents/gallon. The national average price for gasoline was $1.789/gallon. This price was an incredible $1.108/gallon below the price for the same week one year ago. In February, just two months ago, retail prices for gasoline were higher than they had been a year earlier. Now, prices in four of the five PADDs are below the $2/gallon level, with only the West Coast PADD 5 having retail prices above $2/gallon. From late-November through early March, gasoline prices had been above their levels from last year. Prices declined until, during the week ended March 2, retail gasoline prices were a mere 0.001 cent/gallon above last year’s level. The dramatic price declines since then have brought gasoline prices significantly below their levels of last year.
Diesel prices also had been above last year’s level, but prices are now well below their levels of last year. On a national average basis, the retail price for diesel averaged $2.399/gallon. This was 77.2 cents/gallon lower than the price in the same week last year. Retail prices for diesel have now fallen for seventeen consecutive weeks, shedding a total of 68.0 cents/gallon.
Retail Gasoline Prices
The COVID-19 pandemic is having a major impact on the U.S. gasoline market. U.S. retail gasoline prices fell below the $2/gallon threshold during the week ended April 6, and they have remained below $2/gallon for five weeks despite the small increase in the current week. Average retail prices rose by 1.6 cents/gallon to average $1.789/gallon during the week ended May 4. Prices rose in the Midwest PADD 2 while falling in all other. Retail gasoline prices for the current week were $1.108 cents per gallon lower than they were one year ago. Until November, gasoline prices had been below their levels of last year. Prices then rose to surpass last year’s levels in all PADDs. The current downhill price slide has changed this, making gasoline a bargain—if you need it. It has been over four years since the average retail price for gasoline was below the $2/gallon mark.
Gasoline prices hit a peak of $2.903/gallon during the week ended Oct. 8, 2018. Prices then slid downward for fourteen weeks in a row, shedding a total of 66.6 cents per gallon. In the next seventeen weeks, prices marched back up by 66.0 cents/gallon. Prices came very close to the peak they hit in early October. However, the May and the June brought an easing of prices amounting to 23.3 cents per gallon. The week ended July 1 reversed that downward trend and sent prices up once again. The COVID-19 pandemic is causing a severe contraction in demand as people shelter-in-place. According to EIA data, gasoline demand has collapsed by 4% in the six-week period from March 13 through April 24.
For the current week ended May 4, East Coast PADD 1 gasoline retail prices declined by 1.6 cents to arrive at an average of $1.794/gallon. Five weeks ago, PADD 1 joined PADDs 2 and 3 in having retail prices drop below the $2/gallon line. The average price was 99.8 cents/gallon below where it was during the same week last year. Within PADD 1, New England prices eased by 0.08 cents to average $1.825/gallon. Central Atlantic market prices fell by 1.4 cents, arriving at an average of $1.983/gallon. Prices in the Lower Atlantic market fell by 1.9 cents to average $1.665/gallon.
In the Midwest PADD 2 market, retail gasoline prices jumped by 9.5 cents to average $1.573/gallon. This price recovery brings PADD 2 prices back above prices in the U.S. Gulf Coast PADD 3 market, where they had been for five weeks. PADD 2 prices for the week were $1.194/gallon lower than they were for the same week last year.
In the Gulf Coast PADD 3 market, gasoline prices fell by 2.0 cents to average $1.488/gallon. Seven weeks ago, PADD 3 was the first to break the $2/gallon barrier, joined by PADD 2, then by PADD 1 and then by PADD 4. PADD 3 usually has the lowest average prices among the PADDs. PADD 3 prices for the week were a hefty $1.069/gallon lower than for the same week last year.
In the Rocky Mountains PADD 4 market, gasoline pump prices fell by 3.7 cents, settling at an average price of $1.772/gallon. This was the largest price drop among the PADDs. This week’s PADD 4 prices were $1.147/gallon lower than at the same time last year.
In the West Coast PADD 5 market, retail gasoline prices fell by 1.3 cents to average $2.441/gallon. PADD 5 typically has the highest retail prices for gasoline, and until mid-March it had been the only PADD where retail gasoline prices stayed above $3/gallon. Prices this week were $1.266/gallon lower than last year’s price. Prices excluding California declined by 0.08 cents to average $2.208/gallon, which was $1.138/gallon below last year’s price. California prices shed 1.7 cents to average $2.635/gallon. California had been the last state where gasoline prices had remained above the $3/gallon line, but this changed the week ended March 30. On Thursday, March 19, California led the U.S. by taking the dramatic step of ordering a statewide shelter-in-place to combat the spread of COVID-19. This order is affecting approximately 40 million people, and it is causing a dramatic drop in gasoline demand, as well as demand for other fuels including jet fuel and diesel. California retail gasoline prices were a massive $1.371 per gallon below their levels from the same week last year.